technicals & fundamentals | the call: Monday 29 June

[Music] Good Monday to you. A very warm welcome to the call. 10 stocks picked by you to do expert guests over 60 minutes plus my stock of the day. Lovely to be here with you to start this fresh trading week introducing my guest here with me in studio Michael Gabel who's from Fairmont equities nice to see you Michael and Luke Lerative from Santa Cah financial solutions. Hey Luke welcome so we're still hanging on to some modest gains today so just past noon here on Monday when you woke up this morning Luke and you're thinking about the week ahead thinking about all the fancy moves that you could make in equity markets what came to mind. I suppose from you know thinking about Friday and last week was a bit of the self I suppose that was that happened late last week I kind of feel like the breadth of the market starting to sort of pick up and we're seeing a lot of money come out of these to the semi-stocks and an AI stocks globally and you know you've got to ask yourself where does that money go and I think you know Australia is actually a beneficiary market of that and emerging markets are a beneficiary of that so that that was sort of what I was thinking about over the weekend I suppose and today I mean look at our market today for you know the perfect to the example that there's lots of stocks you know they're doing really really well but the benchmarks going nowhere so I think it's going to be a continued story of sort of large cap under performance and mid and small cup out performance and I think there's going to be some really strong pockets in the market and whilst you might not see it if you're an index investor sort of just riding the the ASX 200 you know there are certainly some some really good opportunities out there at the moment. Yeah that's the thing Michael I mean would you agree that it's still very much bottom-up stockpickers market? Yeah 100% which is you know great for people like us I guess yeah just looking forward to the end of the financial year just be very interesting to see once first of July rolls around you know what the market's looking to buy fresh so obviously as we close off this financial year the index as Luke mentioned pretty flat only up slightly you know resources definitely outperform massively healthcare tech under-performed are we going to see anything change there I mean health care started to look a little bit more supportive in the past week but yeah as Luke mentioned in the US you know Brett is improving which is good so it'd be nice to see you know that sort of flow through to see what it flows through to you know which stocks which sectors in our market so looking forward to the new financial year. Yeah okay Luke how much does tax law selling influence any decisions that you have been making through the month of June and then into July? Yeah I think we'll touch on it a couple of times today but I actually think it's a really good opportunity to be buying stocks I think there's a lot of retail investors out there with tax losses in some of these technology names which were you know and we're really hot I suppose going back six or eight months ago you know training on some some crazy valuations so you know we're trying to take advantage and tick the eyes out of that and I think that coupled with I suppose index sort of movements and index exclusions some of these stocks have been absolutely beltered and it really does open up some really good opportunities for alpha I wrote about it over the weekend in my weekly newsletter and yeah continues to be sort of some of the best ideas we've got to be honest. Yeah okay and Michael when you were thinking about the tech sector here locally I know that today it's pushing higher do you think it's still a bit too early to dip your tone to some of these beaten down names? Yeah I'm still very cautious I mean you know we rotated out of that sector last year I'm still happy to just observe from the sidelines you know they're seeing you know some some of the the tech stocks have sort of bounced better than others recently it just remains to be seen whether we continue with that sort of rotation out of out of tech and into into harder assets so I think that that could still back still occur over the next couple of years so you might get some fantastic bounces along the way but just be interesting to see if that then starts to get sold into as well. Got it all right guys let's get to it shall we starting with the stock of the day which is Neuron Pharmaceuticals so it says that the European Medicines Agency has recommended approving its debut treatment for ret syndrome for symptoms across the EU. Now the drug would be the first treatment for this indication in Europe if the European Commission grants marketing authorization while the market is acting like it is done and dusted sending shares close to 30% higher at this stage of this Monday session so Michael I'll start with you for Neuron. What are the charts the technicals telling us on this one? Yeah look it wasn't really doing much up until today it was sort of you know trading sideways for several weeks popped up on today's news I guess that was you know unexpected look it's not a stock we follow but but clearly you know it looked as though you know the day was a debut Dave De Blue. Yep yep yeah whatever it was was going to be rejected and yeah look obviously that's that's lovely news so on a Monday morning first shareholders of Neuron so you know that has real you know obviously for that to happen there's a very good chance that you know we'll see you know we'll see the approval come through I mean that that you know makes yeah it makes a difference to their earnings so you could put a dollar value on that yeah some brokers I noticed that you know Bell Pottles quick out of the the mark this morning and they've already increased their price target from things about $22 up to $23.50 so they still think that it's quite undervalued so look despite today's pop yeah you might you might still see a few more days worth of buying come in so look I don't understand the company well enough to say look this is definitely a buy but I think just based on on the news and the price action it's it's at least a hold. Great okay thank you that's a hold for Neuron is this one that you have in any portfolios would you consider it now that it really appears to be moving further into commercialization yeah Nadeem we are in both near and in both the small cup and the Australian share strategy at Seneca lucky sort of mentioned this this debut drug was not projected but I suppose put on pool with my Europe and I sort of reverse that decision essentially today stock fell from 16 to 11 on that first kind of news and back to sort of 16 today you know we still think you're getting some pretty good optionality here with Neuron and we probably think it's worth you know 30 35 bucks a share depending on how your skin is if you want to do risk it and go forward a few years so plenty of upsides still here for investors it's not going to be an overnight thing but I do think you're getting sort of underprice optionality I suppose with the stock at these levels so I'll give it a bye. Great so Neuron one that you would know well I would imagine Luke yeah good all right let's get to a little bit preview of what we're going to be talking about in this first half hour of the program so you have asked us to comment on La Visa site minor which has done really well over the past month up about 30 percent cog state energy one and I look her resources so lots of different stock names and sectors in here today let's get to the first on the list and this is La Visa this is for Eva all right I'll start with you on this one Luke to get a fundamental view so La Visa wasn't market darling there's still a lot of enthusiasm about its store rollout program um does it appeal did it ever to you not something we owned in the past we sort of avoided it kind of one valuation grounds um and I suppose now you know we've bought it um so you know we think that there's very few instances in fact we can't find one where buying this stock on 20 times earnings has resulted in you losing money our view is kind of that the RBA might be finished talking rates um and if that's the case then kind of all the retailers are probably a buy um we've seen major shareholder brec lunty buying stock and I think the sort of lost making jewels venture that La Visa has kind of been on is sort of obiscaiting the underlying profitability of this business which I think one such resolve is going to be a significant catalyst for the stock and for earnings so um it'll be a buy for us um I'd say to be close to if not our preferred retailer in the sector at the moment on kind of the balance of sort of risk and reward um and yeah I don't think you're going to go too far wrong buying this stock at these kind of valves okay so uh Michael Lucas saying good value in this name what about you yeah look I noticed that um La Visa JBI high-fi or if you'll the retailers are looking like they're starting to potentially buy. amount. So obviously, yeah, the big question is, where do we go from here with sort of interest rates, consumer confidence? We did see last week that in the latest inflation data spending is still still pretty strong. We could see on the chart there that, you know, it's been trading sideways for the last sort of several weeks. Looks like it is trying to form a base. It's not in an uptrend yet. So I guess if you wanted to be a little bit more certain that things are improving, you might want to wait for a push above sort of 25-ish, which would still be fairly cheap for the stock. Yeah, it just really comes back to, you know, as the market, we're still factoring in rate rises, as soon as we start, yeah, as soon as we get to a point where it looks as though that's not going to happen and the next move is down for rates, then these things will take off. You know, I think the market's underestimating where oil prices will be later in the year. So again, the question there is, do we then get worried about the inflationary effects of higher oil prices later in the year or does that cause enough issues with growth domestically that we have to cut rates despite higher inflation. So look, there's a lot of sort of question marks and I think the market looking at the way Levisa is trading, looking at the way JB High Fire, as I mentioned in some of the others, they're potentially forming a low here. It looks like the market's figuring out that, okay, well, maybe we've factored in the worst and it can only improve from here. So I guess what I'm trying to say in a roundabout way is, look, I'd be happy to hold Levisa, but yeah, if it looks like it starts to break into a bit of an uptrend, then I'll be happy to buy it. Yeah, I got it. All right. I mean, I guess that's sort of a narrative that will come up again and again, this sort of interest rate outlook and boy, oil, well, I'm not going to preempt anything that comes up throughout the program, but it was just amazed at the price I paid to fill my car up on the weekend. It was, I mean, the lowest, I think I remember paying in years, but I digress. It's also got the fuel exercise being forgiven by the government, I suppose, as well. All right, let's get to stock number two. So right to the tech space, right to the small cap space as well. And that is sight-minder. This one's for a Roman. So this one was put into the fantasy portfolio at the beginning of June and did pretty well for the portfolio through that month by about 30%. So I'm wondering if it still has more juice left in it, Luke, sight-minder. Yeah, I mean, I think it does. So I've one of the products that's sort of deeply embedded in the hotel industry. It's essentially like the inventory and pricing strategy management for hotels on the digital platforms they sell on. So it's now sort of partnering with Muse who actually operate the physical hotels. You think payments, room assignments, check in, check out deposits, housekeeping, that sort of thing. I think sight-minder, I've said it's sort of on other places as well. It's one of those, the few stocks on the ASX that I think isn't going to be a sort of AI-disrupted business. It's going to actually benefit from AI with cost management and improving their products. We think to the life something like a zero, I think that's a sort of significant risk of disruption. Whereas I think sight-minder is actually enhanced by what you can do with agents and AI. It reported pretty strongly in February and it's got sort of improving sort of free cash flow metrics. It's not that expensive down here. I'm kind of 17. Maybe it's up to 18 or 19 times EBITDA even down now. And that's down from kind of 34, 35 times on average over the last five years. So yeah, it's probably our peak in the tech space at the moment. We own it in both of our funds. And yeah, we think that business has sort of gone from strength to strength. All right, well, we are rocking and rolling with you today. So far Luke, no pressure, Michael. What do you make of sight-minder on the charts? Yeah, look at like a lot of other tech stocks that had that sort of peak in around October last year. And then it suffered, I think, just due to a rotation out of tech. This is one of those few that has rebounded pretty well recently. So where you have seen, yeah, as we mentioned, zero, you know, Ysetech, a few of those others have continued to slide. This one's found a bit of a bit of value, bit of buying. And as we could see, it's popped up quite nicely. So it does look like for at least the short term, there's this further upside here. They do have a fairly sticky customer base with what they do. So yeah, look happy to hold. Still a little bit cautious that these things might improve for several weeks or so and then find that you get money looking to take advantage of those levels and rotate back out. But yeah, look, this is one of the better companies in that tech space. And as I said, it's got a bit of short term momentum. So happy to hold. Hi, Andrew here. Did you know you can get your stock picks straight to the front of the queue and to the guests you choose if you become an Osby's contributor? It's our small way of saying thanks for your support. The link is in the show notes. And while I've got you, we'd love it if you could leave us a review. Thanks for listening. Okay, thank you. Let's get to the next on the list. And that one is for Blake. It's cog state CGS. Blake writes. I think that Blake's got the next two stocks actually. So let's just put this together and hopefully our guests have sort of got the memo. But Blake says these two are polar opposite. So cog state is late make is looking excuse me to make new highs. And EOL is yet to bounce. I don't know neither, but would like to have them in my portfolio given their potential future growth. So that is energy one for Blake versus cog state. Totally different companies, right Luke? So I don't know if you want to if you want to take the first being cog state. It's in the sort of biotech med tech space does a lot of stuff with the brain. So would you be interested in cog state? Yeah, my brain's too simple to handle two things at once. So I think we'll just go cog state to start. So you know, it's a cognitive testing business. The thesis here is it's sort of going to become the de facto standard for clinical trials with sort of a bit of blue sky upside. If it kind of gets into the sort of regular sort of doctor patient screening workflow. It's been a sort of cyclical stop kind of had a run on the sort of Alzheimer's sort of whom I suppose we had in 2022. But it is sort of cyclical in its earnings and it hasn't really been able to get over the hump. That being said, it sort of does appear to be back over the last sort of 12 to 18 months on a reasonable growth trajectory. It does target the sort of the symptoms of Alzheimer's not so much as a cure. Which if you sort of cynical like me about pharmaceutical companies, you know, you'll know that's kind of the Goldilocks scenario. You don't actually want to cure anything. You just want to better help people maintain manage symptoms over the long run. That's how you make real money. So there could be a really long sort of pipeline here for cog state. It is on 24 times earnings though. It's kind of like the upper end of it's kind of range over the long run and sort of M and A transactions in this sector of kind of capped out kind of sort of 20 times more in that kind of 18 times zone. So it's really priced like it's going to get 15% market share from kind of sub 10% where it is today. So a bit of growth factor in here, even if you were sort of bullish on it, you know, might be a bit of an opportunity to take some profits. Yeah, from my experience, fair value or say a hold for the sake of the call. And I think there's better opportunities elsewhere in the market at the moment. Okay, so cog state to start Michael for Blake. Yeah, so you know, look over the business in terms of the way it's trading it is trading a lot differently to EOL, which we'll speak about soon. So you know, it actually does look pretty bullish on the charts. So we've had this situation where you know, had that fantastic run up sort of peaked in around October November. So we're, yeah, a lot of, well, when we look at EOL where that started trending lower this this stock initially it did pull back in December, but it's all the way back to those that recent peak and we could see that sort of rounded out low there. So what it's doing now is it's just congesting under that November high. And interestingly for the past several days, it hasn't been smacked back down. So yes, the sellers are stepping up and using this as an opportunity to sell, but they're clearly being met by very good buying. So I think what will happen here is it may well trade sideways for a bit longer. And then it's just a case of seeing, you know, who's going to win out between the buying and the selling. The way it's going so far, I think there is a good chance that that the sellers dry up and it'd be able to break to a new high. And if that happens then you'll see a further run in the stock. So well, I think it's, yeah, it's too early to sort of buy it here unless it does have that breakout, but no price action is very encouraging and I'd be happy to hold it just based on the chart. Okay, so that's - The Cog State on the charts and fundamentally, let's go to energy one, but I'll start with you, because I'd like to know if this is an attractive chart in comparison or not to help answer Blake's question. - Yeah, so it is a different chart. So, you know, like most sort of, yeah, I guess tech stocks, I know that's a very broad term. It peaked around sort of October last year and has been trending lower. So, yeah, and like a lot of stocks in that sector, that's on the back of a massive sort of run up in the middle of 2025. So, you know, they've given back a lot of those gains. This is still trending lower. Yeah, look, I think there's a bit of hope that, you know, some volatile energy markets can help this stock out. You know, that remains to be seen. You know, they did have a bit of a downgrade a month ago. We could see when it dropped there in May. Just due to the timing of some of their, their contracts coming out, but look, it does look like, you know, your typical tech stock that's sort of deflating and just finding money moving out of it to find another home. So, I would be a seller of this until it at least started to level out. I just don't know when that will occur. - So, energy one in your view, Luke. - Yeah, sort of another stock we know reasonably well. It's Sanaco. We kind of, we bought this thing online, 15 or 17 times earnings, about at five buck level a while ago, and then kind of got up to, you know, 50 times plus earnings. Kind of as the growth kind of became really well known across the market and a lot of sort of larger funds and kind of rotating into the stock on sort of potential for index inclusion, playing that little game. So, I think there were signs here, you know, when to sell this stock, you saw that the CEO stepped down, long standing CEO stepped down, and there was some direct selling in that kind of 14 to $17 range, which sort of squared with our view on what this business is sort of worth, you know, sort of peak value I suppose. As kind of Michael touched on the earnings, this business can be a bit volatile, kind of half to half, and you know, the downgrade wasn't great, and I'm always a little bit sketchy on I suppose businesses that downgrade and blame contract delays. It's always a bit of a like, we'll see and kind of anybody can use that excuse and it's kind of hard to disprove, but not much to hang your hat on. Business continues to reiterate that their pipelines are continuing to grow. You know, it is still a good business, it's got some good tail into behind it, but definitely a few question marks for us. We're not there at the moment, probably just be a hold here and wait and see, but yeah, I'd like to see the business, you know, string together a couple of probably better quarters and show a bit more, I suppose solidarity around not just the management and the people, but also kind of the growth and the strategy execution here. So yeah, a little hole from me, just cautious at the moment. - And so the answer to Blake then, and information only, not financial advice for your personal circumstances, but you're not sort of looking uber favourably on either one of these businesses right now, but you did give three buys earlier in the program. So Blake, you would just stick steer clear for now. Luke. Can you hear me, Luke? Don't know if we've got Luke. I'll ask Michael the same question. So neither one of these companies who'd be rushing out to buy. - No, not at the moment. - All right, Blake, hope that helps. Hope that helps answer your question. Let's get to the stock number five, and that is ILUker Resources. ILU, this one is for Leo. I'll start with you on this Michael Gable. - Yeah, so ILUker, traditionally a mineral sand's company and they're pivoting into rare earths. So they're building processing facility that should be up and running next year. And obviously it's a very topical area at the moment, as Western countries looked at a verse fire away from China, we know that something that the US has explicitly spoken about. We saw, I think it was a G7 agreement last week. Basically agreeing to source, I think it's at least 40% of rare earths from countries that are donating in China by, I think, 2030. So what there's movements being made in that area. So obviously ILUker's sort of in the right space at the right time. They had a couple of good announcements last week. They do have access to government funding. They have signed an off take agreement with a major car company. But in that latest announcement, it looked as though, now they'll just be seeing a bit of information they didn't tell us about the pricing. They didn't tell us who the agreement was with. And it looks like the share prices fall and back a bit. But it's now trading around that $7 level. It does seem to be some good support around this level. So I think potentially investors could use that as an opportunity. So I think around these levels, I'd be happy to buy ILUker. I think if you want a bit less risk, you go for Linus given their already in production. And ILUker's not going to be producing till next year. But no, look, I'm happy with current levels ILUker. And I think it could do well over the next few years. Yeah, right. That's by coming from Michael Gable. ILUker Resources. Luke, what do you make of it? For me, I feel like it's still a mineral sand business. It's a bit of a basket case. Potential contrarian opportunity here. And I kind of appreciate that. But there's no real catalyst. I think for the mineral sand price recovery, supply demand, balance to kind of get fixed. I think this rare earth is kind of pivot. It's probably a bit overdone. It's in that risky kind of construction ramp up phase where Ben and I really like to avoid investing altogether. You're plenty of sort of government money and funding coming for these rare earth projects. I'm not sure the economics stack up without that funding to be honest. But you know, so you know, you better continue, I suppose, if this rare earth thing's going to play out. And you know, they're still cyclical like every other commodity. So no need to worry. And it's from our perspective. I'd be a seller. Well, you couldn't get a more different view from my two expert guests. So we do appreciate the variety. And as I've said, this is information only not personal financial advice. OK, gentlemen, take a bit of a break. I'll review what we have learned thus far. And Neuron Pharmaceuticals. It's a hold for Michael, who's not overly familiar with the company, but just going on the technicals, a hold for him. But Luke owns it in a couple of funds. Good optionality, he says he has a $30 to $35 price target on the company. So in those terms, it's a buy. Levisa, it is also a buy for Luke and the team at Seneca. He had been avoiding evaluation grounds, but the house view there is that the RBA is done and just. It also brought Blundee buying some more shares. It's a buy. Now, Michael says that there's a few retailers that look as if they're starting to bottom out. So he's not going in just yet. But if you're there, he would hold it. He's just going to look for some more evidence that this consumer pain is over. SiteMinder, it is again a buy for Luke Leritiff. He doesn't think that AI is going to disrupt this business. In fact, it might help improve it, improve it along with its free cash flow. So he put a buy recommendation on it. But it's a hold. Look, Michael says it does look as if there could be further upside from here, but he's still a bit cautious on some of these tech names. Fines, better value in other areas of the market. Cog State, it is a hold for both of my guests. In fact, leaning toward a take profit if you've got them for Luke. E, energy one, EOL, it's a cell. It's trending lower. Says my guest, Michael Gable, but it's a hold for Luke. He just thinks that the earnings will continue to be volatile. Good business, but wants to see a bit more solidarity and strategy. Aluca, it is a cell for Luke. It's a buy though for Michael Gable. All right, that brings us to our fantasy portfolio update. I'm not going to bother going into detail. Because of course, we get a new edition of the Investment Committee coming out this afternoon after the COB. So that will be ready for you to watch this evening. So far, the fund is up by 31%. So you recall we put insight, mind, or put in energy one to start the month of June. What will the committee do this time around? You'll have to watch to find out. For more than 50 years, he's been guiding Australians, been making smarter investment decisions. And now you can catch him on Ausbees. Join Peter Switzer for an exclusive series packed with essential local and global insights that matter to your money. Re-rated our economic growth forecast for the end of this year down to 1.6%. under in six times in the recent investor day presentation. People often look at the share price as I think how I could have missed it, but the thing is this is not the same company from the long, long way. Watch live on Osby's Tuesdays 1pm or catch up on demand and subscribe to the Switzerland newsletter free. Visit switsert.com.au T-Lyx is coming up along with catapult sports, Emiko. Don't talk about that. We're very often resmed and wise-tagged. All right, so let's start with T-Lyx because, boy, Luke, this one has really picked itself up off the mat since about February. Is that based on fundamental news flow or sentiment or how do you rate T-Lyx? Yeah, look, it is a high growth, kind of high quality stock on a roots evaluation. So I think it's kind of re-rated with the market, I suppose. But we did set a founder dump 100 million bucks with the stock at $30 and the shares now trade at $15. So I kind of think that's all you really need to know with this thing here. It's had a few FDA stumbles and trial results of slow and unreliable and unpredictable usbos. Not really the kind of stock that we like to own at Seneca, probably even for Bridal Minds to be honest. I'd probably sell it here, but I understand why people want to own it. Yeah, because it's one of those biotech success stories that have moved into commercialization, of course, they're constantly putting R&D into the business to find other applications for its technology. Michael, what are the charts telling us? Yeah, look, it is getting off the canvas here and it is looking better. It's a company that's well covered on this program. Everyone asks about it. But no, look, the price action has been improving. I've got a daily chart here with a 50-day moving average. This is one that we were happy to trade in the past, obviously when it was trending up and we used that line as our trailing stop and you could see now that since about February that the share price has been edging high, that blue line has started to, it is moving high now. It's not moving lower. From a technical point of view, I do expect a bit more upside. There's a bit of resistance here at 16 bucks, but yeah, it looks like it wants to improve. So again, I'd be happy to hold it while it's heading higher. And I think for our viewers that aren't completely wedded to the stock, use that blue line, the 50-day moving average is your trailing stop. So that's 14 or 1420, something like that? Okie dokie, let's get to the next on the list, which is catapult sports. This one's for Roman. So is this high quality in your books, Luke? It's bit of market darling. It's got some real technology that is being used in a lot of different applications. Is it at risk of being threatened by AI in any way, shape or form in your view? I think it's one of those other lucky stuff I talked about, start mine before. It's another one of those stocks where it's been sold off like AI is going to break it, but it's probably a business that's more enabled by AI than anything else. Stocks gone from seven bucks to three bucks. Business is still going well, but I'll probably another candidate. We're tax loss selling. It's got a pretty strong retail following. And index exclusion have kind of, not this stock often perched. As we sort of mentioned off the top, we like to buy things off people who are four sellers and indiscriminate sellers and price incentive sellers. It's often where the best opportunities lie. This business raised capital really well at $6.68. So it's got a healthy cash balance. It's kind of 16 times EV to EV but down now, it's still growing 15, 20% per atom. Back on three times EV to sales, I think it looks really good here at three bucks. We've been buying recently and we're kind of back in the stock for the first time for a while. So yeah, buy from us. Yeah, put your money where your mouth is, right? So that's a good one. On Catapult's sport, another buy from Luke. Do you see anything in the charts that will tell us that the downtrend has come to an end? Yeah, look, nothing yet. I mean, obviously, yes, it is a great business. No debt there, they're growing really well. But again, I think we've done well just not holding these text docs since the middle of last year and we could see on that chart why that's the case. So yes, it's dropped from $7 to $3. But it also went from $3 to $7. In the middle of last year, which is the wrong move on the way up or on the way down? Obviously, a lot of people are assuming that it came from $7. So it should be back at $7, but maybe it needs to be back at $3. I think that a lot of this pullback in text docs isn't necessarily due to AI. I do think it's just rotating out of that sector as, again, we enter a more uncertain world, higher rates on average, etc., etc. So look, it's still trending lower. Yes, it's a great business, but maybe it'll get a lot cheaper. So look, I'm happy to sell it here and stay out of it while it's still deflating. Okay. That's a word you've used a few times. Deflate for the text space. All right. Different views, different strokes for different folks. Let's get to stock number eight on the list. And this one is Enoco. And this one's from Matt, and particularly asking you guys, Ben and Luke at Seneca wondering if you still like Enoco. It's looking real cheap here. He reckons under a dollar, even with the softer weather affected second half. Enoco holding. So under a dollar, is it still looking good? Do you still like this one? Yeah, it been a while since we've all had to talk about Enoco. So yeah, it looked way, I think it's cheap, but it's cheap for a reason. Matt, I think it was, he's touching on the kind of the weight class three months. Which, you know, management's chalking up to rain in Queensland and fill supply issues. But this is a business that, you know, can't pass those kind of costs onto their consumers. It's a competitive space sort of equipment rental. So the way seen further earnings, weakness risk here, despise sort of management kind of guiding to a V-shaped recovery into October. So yeah, you know, I'm the positive side of this goes, it's revenue sort of underwritten with pretty good visibility on its future earnings. And if it does get back to kind of 20% return on capital, you know, that's going to employ like 140 million bucks in free cash flow. So like those metrics are still quite attractive at the right price. My issue here and I hate being negative, but it is a real issue with them. It code is the fact that they might generate a really good free cash flow. And then they're going to go and as they've done and, you know, destroy shareholder capital in the past with acquisitions, they're back looking for M and A targets. You know, we simply just think that the best use of capital for shareholders, given that they're trading at 0.4% that, you know, sorry, at a discount to NTA would be to go and buy more Miko shares and do a buyback. So management don't seem to understand the priorities from a shareholder's perspective when it comes to allocating the free cash flow and the capital that they are generating. So for RAS despite kind of, you know, relatively low debt, you know, a little bit of growth optionality, potential and, you know, decent kind of operating metrics, you know, we'd be a stellar here. Oh, okay. So there you go. That's an updated view from Sennick Comet. You asked, let's take a look at it on the charts, Michael. Yeah, I agree with, you know, with his analysis and, you know, the chart looks poor because of that. So it's trending lower. It was trending higher up until early this year. And it's bucking the trend of other sort of engineering services companies which are doing really well. I mean, there's, you know, there's a few out there which are trending higher and winning new contracts and, yeah, look, I don't need to sort of repeat everything Luke said. So, yeah, we could see it in that chart. So that is a, that is a sell. You don't need to hold something that's sliding that rate of knots. So sliding, Miko, that's an avoid a sell for both of my guests. I hope that helps you, Matt. And thanks for the context. It always, I think, helps inform the conversation totally up to you though out there. And if you would like a stock answer, you can just send us a line at osbus.co/callpix. We read each and every email that does come in. And if you become an Osbus supporter, which we love it if you did, top right hand corner of your screen, you can get your stock pick right to the front of the queue to the expert of your choice. It's a little bit of a carrot. All right, let's get to stock number nine on the list. And this one is ResMed. So, ResMed is for ILA. I don't think Luke goes any big question mark why ILA is asking about ResMed. I mean, it really has been a poster child for a company that I'm told continues to report well. The numbers seem to be pretty good, but it just hasn't really been rewarded by market participants. So, whether or not that's down to GLP1, it feels like that's a story from a long time ago or what it's coming down to. It's certainly been a great day. company that has been frustrating for many investors. Although I do know it has been sort of moving higher in just the past little while. So what do you make of resmed these days? - Yeah, I mean, you kinda hit the nail on the hair. It's been a GLP1 sort of disruption story. Resmed's still always kind of the market leader for physically opening the airway for people with sleep out near. And that market does remain under penetrated and is still kind of the go-to, I suppose, for doctors at the moment. I'm not sure if long-term view that will be the case, but I think the short-term, medium-term growth outlook for resmed still looks pretty robust. It's forecast to kind of do 9% percent per annum growth over the next three years. It's had a pretty good track record for delivering that kind of growth. It's already fallen from 30 times down to 18 times and they're kind of back to 25 times. And then back on the nose again. So, you know, it's definitely been a stock you need to trade and trade well and actively to make the most of it at the moment. I think at the right price, resmed's interesting. I think it's probably a whole around these little levels kind of just in between that margin of safety that we'd be looking for from evaluation perspective and probably like premium valuation that we'd be willing to let some stock go out. So it's sort of just right in the middle right now for me. Yeah, okay, but fundamentally, you think it's a quality business still. It's a tough one. It's a really tough one. I mean, you kind of got to take a view on GLP one. I think if you ask Ben, he'd be more kind of neutral about it. I'm a little bit more sort of bearish, I suppose on GLP ones. I think that, so the GLB one disruption factor, I'm a little bit more bullish on what they can achieve. And I'm not quite sure that this doesn't become kind of the standard way to treat sleep apnea. That's just simply by losing weight. So look, I don't know how this plays out. I'm not really sure how this sort of game changing technology really impacts a lot of companies, particularly in a pill form. I think it could be really interesting. I think a lot of that's in the price of the companies that manufacture and distribute these drugs, but maybe not in the price of a business like resmed if we take a 10 or 15 year view. So if you're going to value in resmed on terminal value and expecting it to trade on huge growth multiples of, I think you might be disappointed. Doesn't mean you can't still make money out of it from the rock boss. - It's an interesting one, and it's an under-room, because the people that I know that use these sleep apnea machines from resmed aren't doing it because of weight. So it's just an interesting sort of lens, but maybe that means that it's too hard basket. Like is it too hard basket for you, even though we've been very accustomed to calling it a quality company? - I wouldn't say it's too hard basket. I think if it gets cheap enough, then we know enough about the business, we can give it a go, but I do-- - So everything is a price. - Yeah, look, I do agree with Luke, that there's complications now because of these drugs. It's one thing to sort of look at, let's say the last 10 years were the financial performance of resmed, let's say, to a great business. It ain't usually trades on a P of X, and now it's a bit under that, so it's good value, but we need to forecast. And over the past 10 years, we could forecast what's happening with resmed, but now it's harder to forecast, and maybe it doesn't deserve to be on the same premiums. It always used to trade out, because you have this other factor, and I agree with you, people who can't sleep, it's not just because of weight, so. But yeah, look, it does muddy the waters, it makes it harder to determine what valuation it should be at. I do think part of the decline over the past several months was also just due to a general money moving out of sort of growth, high PE stocks. Based on the weight trading in the past couple of weeks, it does look like it's holding in here, so it's enough that I'd say, look, it's a hold. It's maybe trying to find a bit of a low, but look, when they were back, as we could see on this chart here in 2023, when they were back at that sort of $22, $23 level, but that was a gift, we bought it, we traded it. That was great, but 28 bucks, yeah, look, I think you need to scare everybody and see resmed down into those lower 20s, and then I think you just sort of step in and buy it because it just be, you know, so oversold that it's gonna bounce, but $28, yeah. Bit hard, bit hard to know. - All right, well, that's resmed for your ILA. You'll have to make up your own mind. Let's get to stock number 10 on the list, and that is Wise Tech, so this one is for Oscar. We get so many questions about Wise Tech, and for good reason. This time last week though, we had some really unfortunate headlines at least coming out about its founder, Richard White, he was forced to step down as CEO over previous corporate governance issues. This really, you know, without going too much into detail into the stories, you know, allegations of even, you know, potentially human trafficking, visa issues, pressuring people to do what he, you know, like it's not a good story from that point of view, but Luke, Wise Tech and your view still a good story from its technology, from its market dominance, point of view, or are there cracks sort of appearing there as well? - Yeah, kind of one of those lines of looks cheek, you know, relative to how it's traded, but it's kind of always been an expensive premium stock on, you know, that's been growing. So it's back on 22 times earnings now. So perhaps if you're real believer in the product, and the management team, and their ability to execute, sure, maybe you might want to get in here for us, we think the sort of governance, and I'll spare myself the law, so but all the drama with management, you know, is a bit of a red flag, and we think the biggest red flag of them all is, you know, they've lost their biggest customer. So, you know, from my perspective, it's pretty easy to avoid here. I think there's definitely a lot better kind of large cap I had sex listed businesses you can buy on, you know, 15 times already, Vda, Vda, that are growing double digit, and, you know, run much more stony businesses, I suppose. I look at something like an RDA at the moment, and just think that, you know, that looks like such a better value relative to a wise tech at the moment. So, you know, with essentially a monopoly business in Australia. So, you know, be a seller or a wise tech, and plenty of other things to do with a moment. - Okay. Yeah, lost as big as customer, implementing AI, and I just think that the customer loss is a really interesting one, because we were told that it was so ubiquitous that you could not, you know, you just couldn't, there was no alternative to wise tech, or it was getting to that point, but yeah, Michael, I'd be interested to get your thoughts fundamentally, 'cause then you know, these things fundamentally, as well as on the charts, because regardless, putting all the allegations aside, there is still key man risk with Richard White, right? Like he's still a hugely influential presence. I don't think that's any stretch of the imagination to call it that in wise tech. And there's real potential that he might have to step back from the company, and that will leave a vacuum. - Yeah, a lot of, you know, a lot of the customers there because of him. So, yeah, that is a risk. And, yeah, and we've seen, yeah, they're their customers, obviously not just losing customers, but their customers are able to sort of find ways around using the product. It's not as sticky as we all thought it was going to be. So that does raise a lot of questions. I look ultimately when it comes to whether this is a buy or not. I think that, you know, there's enough going on that this thing will get oversold and hated so much that it will be an opportunity. That's always a hard thing to pick. I don't think we're there yet. I mean, you know, last year, you know, saying something similar about mineral resources, everyone just seemed to hate it. Just seemed like everything was going wrong. They're dead, everything. But at least you have the tailwind of improving lithium prices. And it's just a simpler sort of business. This, this business, yeah, not there yet. So as we could see on the chart, it's actually back to where it was just before COVID. So it does look like it's come back a long way, but maybe it needs to be a $20 stock and everyone just completely gives up on it. You know, Richard's gone. I think we need to see a lot more water under the bridge and then it'll be an opportunity, but I think we're not quite there yet. But that goes to what you were saying as well in general of the tech spaces that you're not quite ready. Not quite there yet. You're not seeing the bargains that you need to see. Yeah, that's right. I mean, I'm still avoiding tech, but I think this one's got that sort of unique situation where, yeah, because there's a lot of other tech stocks. Everyone loves them. And, you know, they're still selling to happen. This stock, yeah, there's a bit less of that. There's all these other things going on that I think from a trading perspective, there'll be a trade in this at some point. It will, as I said, I don't know if it gets down to 20, if it gets down to 15, I don't know what the number is. But there'll be a point where everyone's just given up on a dump dirt and just thought it's a dead business. And then you might just get one of those, you know, rip your face off sort of rallies and there'll be a bit of a trade there. But to me, it doesn't look like that's the case yet. It's got it. All right, so tax loss selling did come up. Luke, we will get past this into the new month of July. We'll probably have a few more downgrades coming. Do you reckon from companies before we make it to reporting season in August? I mean, we saw that 40% fall coming through just last week when we had, oh my gosh. Yeah, Judo. Judo. You know, warning. Do you think we might see a few more of those sort of landmines before we get to August? Oh, definitely come and say that they won. I hope it's something the company is that we own. But look, now I've begun sort of sneaky bullish at the moment. I think there's a lot of kind of investor money leading the market. And I think Michael's kind of touched on it a few times today. Money doesn't really leave the market. What it does, it rotates and changes into different sectors and different parts of the market. You know, whether the earnings expectations are improving versus, you know, those that perhaps have peaked. So I think there's some sort of sneaky positivity out there. I'm not too bearish about the earnings environment here in Australia. I think, you know, the retail sectors largely kind of known now. If interest rates are peaking or, you know, maybe have peaked already, then, you know, there's going to be some supposed risk on appetite, not just in that sector, but also, you know, reach another rate-sensitive parts of the market. I think if we're having a rotation away from the US and into emerging markets, it's going to be really strong for Chinese growth and the commodity sector here and the sort of pro-sicklyable commodities, which, you know, we've been talking about for six or eight months now. You know, we've got copper at all time highs and I think, you know, Dr Copper of the lady indicator. So look on, you know, not too bearish. I think the survey data looks pretty good. And certainly, you know, we're finding some of the best opportunities, you know, we're seen for four or five months. Says the man who saw Nurend in his portfolio is lift by 30% today. Smile on his face. All right. Just a quick review of what we learned in the second half of the program. So T.L.X. it's a cell for my mate Luke. It's a hold for Michael. Catapult is another buy coming from Luke. He thinks it will actually be enabled by AI and that is, you know, that's a big question right now. Though it's a cell for Michael. He's, it's in that deflationary text space in his view. Emico, it's a cell for both of my guests. It's resmed a hold for both of my guests. It's just a bit too hard for Luke right now and Wise Tech is sell an easy avoids as Luke or a cell. Michael says it will get cheap enough at some point, but that point is probably not now. Look a reminder that the new addition of the investment committee will come out today after the COB. We hope you can watch that to see what has happened in the portfolio. In the meantime, though, a huge thank you. Michael Gable, Catapult, Equity is always good to see you and Luke, Meredith from Seneca Financial Solutions always good to have you with us as well. I hope you guys have a good day. Good week and we'll see you soon. And thank you for watching. Thank you for sending in your requests. Osvis.com/callpix. We'll get to them as soon as we can. Stay with us. [Music]